Wal-Mart international growth slows, shares fall

BENTONVILLE, Ark., Fri Aug 17, 2012 – Wal-Mart Stores Inc.’s full-year profit may miss analysts’ expectations as growth slows in its international markets, pressuring the company even as its U.S. discount stores continue to prosper.

The world’s largest retailer, viewed as a barometer of economic activity, said on Thursday its cash-strapped customers tend to spend more at the beginning of the month when they get their paychecks. That “paycheck cycle” has extended its reach to the company’s markets beyond the United States.

“It became more pronounced across the globe,” CFO Charles Holley told reporters, without naming any specific markets where he sees the shift.

Wal-Mart’s higher second-quarter profit narrowly beat the average estimate of analysts polled by Reuters. While the company raised its earnings outlook for the full year, that could still miss analysts’ expectations.

Wal-Mart shares were down 3.4 percent at $71.91, erasing recent gains, and were the worst performer in the Dow Jones industrial average in afternoon trading.

In the United States, Wal-Mart’s largest market, shoppers’ top concerns are employment, gas prices and higher food costs, Holley said.

Other retailers, too, added to concerns about the plight of lower-income U.S. consumers.

Dollar Tree Inc. forecast quarterly earnings below Wall Street estimates on Thursday. And Sears Holdings Corp. said U.S. same-store sales fell 4.7 percent at the Kmart discount chain.

Still, Wal-Mart plans to open more stores and expects growth across its regions, but, as it has said earlier this year, will slow down store openings in Brazil, China and Mexico.

In Brazil and China, where it has hundreds of stores, it wants to “let them catch their breath” and work on moving to everyday low pricing and improving profitability, Holley said.

At the same time, the store approval process in Mexico has slowed and become more complex in the wake of allegations the company had bribed government officials to speed up approvals.